Outsourcings And Its Effect On Business

1140 words - 5 pages

Outsourcing is reshaping how business operates. In order to determine how outsourcings affects the management of business operations, we will begin by defining outsourcing and examining how it has changed in the recent years. Next we will look at what type of operations are usually outsourced and how to take full advantage them. Then we will address what types of business operations are best kept "at home" and why. Finally, we will examine problems or pitfalls with outsourcing, including their effect socially and politically.American Heritage dictionary defines outsourcings as "The procuring of services or products, such as the parts used in manufacturing a motor vehicle, from an outside supplier or manufacturer in order to cut costs." In the past,outsourcing predominately affected the manufacturing sector. Cheap manual labor overseas made it profitable for corporations to shift many unskilled tasks to foreign markets. Today, outsourcing is in a transformation and encompasses more than just manufacturing. Corporations are beginning not only to outsource unskilled manual labor tasks, but more highly skilled positions are beginning to be outsourced. Examples include financial services, human resource services, secretarial activities, information technology services and sales and marketing. Is it smart to take complete advantage of the cost savings associated with outsourcing and to outsource as much as possible? Lets take a closer look at which business operations are good potential candidates for outsourcing.Randy Chott of CIO Magazine argues that globalization is creating a global workforce and that "the only jobs that are safe are hands on jobs. Policemen, firemen, doctors, and dentists." This is an over exaggeration but provides a look at how vast outsourcing has become. Outsourcing is an increasing important portion of business today and business managers need to examine their corporations to determine what, if any, outsourcing is right for them. When trying to decide what operations are ripe for outsourcing, business managers should focus on items inside a corporation that can be digitized and easily and inexpensively sent to the other side of the world. Granted it is still possible to outsource the production of physical products, but often the cost of shipping overrides the cost benefit attained from outsourcing. Additionally tasks that demand greater expertise or specialists in a certain field that don't currently exist in your corporation maybe a perfect choice for outsourcing. Business Link, an advice and information service for the UK Department of Trade and Industry, provides the example of outsourcing the website maintenance and IT servicing of a small "Holiday Business" corporation as an ideal business operation to outsource. "Handing over these activities to a specialist IT outsourcing company could be a wise move. The outsourcing company brings to the holiday business the benefits of economies of scale as well as its investment in...

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